First Quarter 2018 Earnings Presentation

Transcription

1 First Quarter 2018 Earnings Presentation

2 Forward Looking / Non-GAAP Information This presentation includes forward-looking statements. The matters discussed in this presentation, as well as in future oral and written statements by management of KCAP Financial, Inc., that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as may, will, should, expects, plans, anticipates, could, intends, target, projects, contemplates, believes, estimates, predicts, potential or continue or the negative of these terms or other similar words. Important assumptions include our ability to acquire or originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this presentation should not be regarded as a representation by us that our plans or objectives will be achieved. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. You should not place undue reliance on these forwardlooking statements. The forward-looking statements relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this presentation. This presentation may also contain non-gaap financial information. The Company s management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of the Company s financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. 2

3 Q Highlights Components of Distributable Resources Debt Securities Portfolio Net Investment Income of $0.07 per basic share for Q1 18 vs. $0.09 for Q1 17 Taxable Distributable Income of $0.06 per basic share for Q1 18 and $0.06 for Q1 17 Investment Income on debt securities portfolio represented ~55% of total company Investment Revenue vs. ~59% in Q1 17 and ~53% in Q4 17 Weighted average interest rate on income producing debt investments was 9.8% in Q1 18 vs. 10.1% in Q4 17 Asset Manager Distributed $820,000 in Q1 18, compared with $650,000 in Q1 17 Credit Performance Portfolio is well diversified across 22 different industries and 50 different entities with an average debt investment of approximately $2.8 million One investment was on non-accrual status Two of our PIK investments were on partial non-accrual status Net Asset Value Net Asset Value of $4.85, down slightly from $4.87 in Q4 17 Distributions $0.10 distribution declared for Q1 18 Data as of, or for the three months ended 3/31/18 unless otherwise noted 3

4 Recent Activity Executed new $50 million Revolving Credit Facility Approximately $19.8 million outstanding at March 31, 2018 Provides for significant additional liquidity in order to grow the investment portfolio Redeemed $20 million of 7.375% Notes Joint Venture nearly fully invested at March 31, 2018 Trimaran currently warehousing assets for a new CLO 4

5 Originations and Repayments Invested $52 million in new originations during the first quarter Funded primarily with cash on hand from year-end 2017 Mix of first and second liens Repayments were slow in Q Weighted average interest rate on income producing debt investments was 9.8% in Q1 2018, down slightly from 10.1% in Q4 17 5

6 PORTFOLIO HIGHLIGHTS PORTFOLIO DEBT SECURITIES - INDUSTRY DIVERSIFICATION Related Party Loans 3% 3% 2% 2% 2% 2% 1% 1% 1% 22% Healthcare & Pharmaceuticals High Tech Industries Energy: Oil & Gas Textiles and Leather Capital Equipment 4% Beverage, Food and Tobacco Chemicals, Plastics and Rubber 4% Telecommunications Environmental Industries 4% 5% 20% Banking, Finance, Insurance & Real Estate Aerospace and Defense Transportation: Cargo Services: Business 6% Media: Advertising, Printing & Publishing Automotive 7% 10% Forest Products & Paper Other Data as of 3/31/18 6

7 Strong Credit Quality The credit quality of our current portfolio remains strong. 78% of the debt securities portfolio is secured as of March 31, One investment was on non-accrual status. Two of our PIK investments were on partial non-accrual status. Data as of 3/31/18 unless otherwise noted 7

8 Financial Highlights March 31, 2018 Investments at Fair Value NET ASSET VALUE Fair Value NAV per Share Investments in money markets $ 9,905,719 $ 0.27 Investments in debt securities 166,115, Investments in CLO Fund securities 40,768, Investments in equity securities 4,478, Investments in Asset Manager Affiliates 38,663, Investments in Joint Venture 21,767, Total Investments 281,698, Other assets 9,729, Total assets $ 291,428,040 $ 7.80 March 31, 2018 INVESTMENT PORTFOLIO Cost/Amortized Cost Fair Value Short-term investments $ 9,905,719 $ 9,905,719 Senior Secured Loan 56,195,353 52,989,838 Junior Secured Loan 80,066,631 75,858,237 Senior Unsecured Loan 35,777,283 35,777,283 Senior Secured Bond 1,501,366 1,490,400 CLO Fund Securities 61,300,443 40,768,620 Equity Securities 10,571,007 4,478,280 Asset Manager Affiliates 52,091,230 36,663,000 Joint Venture 24,914,858 21,767,376 Total Assets $ 332,323,890 $ 281,698,753 Borrowings $ 100,226,261 $ 2.68 Other Liabilities 10,199, Total Liabilities 110,425, NET ASSET VALUE $ 181,002,087 $ 4.85 Data as of, or for the three months ended 03/31/18 unless otherwise noted 8